Commercial hard money lenders have the ability of providing borrowers with a unique kind of financing wherein borrowers receive funds depending upon the worth of their offered real estate. Loans provided under the commercial hard money lending category are not usually issued by conventional banks, commercial banks, conventional lending companies and other deposit institutions. Hard money often works similarly to bridge loans since the two have similar lending criteria and cost to borrowers. The major difference between the two is that bridge loans cover commercial or investment properties that might be in transition and do not qualify for conventional financing.
Commercial hard money lenders, on the other hand, do not only refer to loans based on assets with reasonable rates but also indicate distressed financial situations including foreclosure or bankruptcy proceedings that take place as well as arrears on existing mortgages. Hard money loans can also be described as part of real estate loan that are collateralized against the property’s quick-sale value. The structuring of this type of loan is also based upon a certain percentage of the subject property’s quick sale value called the LTV or loan to value ratio. This ratio typically hovers around sixty to eighty percent of the property’s worth.
To help you in identifying the LTV of your property, it should be noted that it refers to the present purchase price of the property. This amount refers to what commercial hard money lenders can reasonably anticipate to realize after selling the property in case the borrower defaults. Hard money lenders are considered to be among the strongest financing sources since aside from having huge deposit reserves, the lenders are also capable of making discretionary decisions based on non-conforming loans. They cater to the financial needs of borrowers who do not conform to the standards and credit guidelines established in conventional funding.